My Lords, I am grateful for the opportunity to open this debate for this Grand Committee to take note of the United Kingdom’s approach to negotiating the future relationship with the European Union. I am looking forward to the usual extraordinarily well-informed and wide-ranging views that we will no doubt hear from your Lordships this afternoon.
It is over four years since the British people voted to leave the European Union in the largest democratic exercise in this nation’s history. It was an historic vote for freedom, parliamentary sovereignty and change. Since then, two general elections have underlined and cemented the Government’s mandate. The road has been hard and, at times, I confess, difficult—not least in this House and sometimes the other place. However, at the beginning of this year, thanks to this Government, Britain left the European Union.
As the 19th-century Danish philosopher, Kierkegaard, once said:
“Life can only be understood backwards; but it must be lived forwards.”
In that spirit, I believe that we must not lose sight of where we have come from. The principles of our approach for a future relationship are rooted in the mandates that the British people have repeatedly given the Government—and, indirectly, all political parties—to regain our political and economic independence. No matter what happens in the negotiations, by the end of this year we will leave the customs union and single market and become a fully independent and sovereign country.
There is no mystery about where the British people and Government stand. We have been clear from the outset that we are seeking a relationship that respects the independence for which the British people voted and for an agreement with a free trade agreement at its core—one similar to those that the European Union has readily agreed with other countries. We are asking not for a special or bespoke relationship but for one which is grounded in precedent, which is aligned with the parameters agreed in the political declaration and which builds on the European Union’s own past offer of a Canada-style deal. We have also always been clear that such a deal must of course accommodate the reality of the United Kingdom’s well-established position on state aid and fisheries and fully recognise the United Kingdom as a sovereign equal party.
However, the European Union has continually insisted not only that we must accept continuity with EU state aid and fisheries policy, but that this must be agreed before any further substantive work can be done in any other area of the negotiation, including on legal texts, making it unnecessarily difficult to make progress. There is still a lot of work to do, but it remains our goal to reach an agreement and we will continue to work hard to do so.
We have kept the House updated throughout the negotiations. I have issued Statements after each round of negotiations when the House has been sitting and did so most recently on 14 September. I can now update the House again on progress and I welcome the opportunity to be able to do so in a debate of this kind.
My Lords, I thank the Minister for his lessons for life at the beginning and for his update. However, I am particularly pleased that the wording that he chose for the debate is about the Government’s approach to the talks, given how very sadly the Government have managed to undermine trust—the trust that guarantees that “my word is my bond”. Well beyond our relationship with the EU, these tactics will affect our international relations beyond trade to “diplomacy and integrity”, in the words of our DPRR Committee. How the UK is seen globally, and whether we respect international law, affects our credibility, our moral authority and how other countries behave. It will also affect how Parliament is seen. As my PhD supervisor, and renowned Westminster watcher, the noble Lord, Lord Hennessey, mused to me, “All these years I’ve naively assumed that Parliament exists to make laws, not break them.”
Today, I want to touch on four points: obedience to the rule of law; state aid; UK citizens; and devolution. As Mrs May, other former Prime Ministers and Conservative Party leaders have stressed, disregard for the rule of law undermines trust in us as a nation, with the Government’s own chilling words, to
“disapply international and domestic law”.
To the outside world, renouncing of established international law or a treaty matters for the future. No. 10’s statement that
“unless the EU agree to each of the UK’s demands in the joint committee, the UK will breach the withdrawal agreement”
will be quoted around the world, to the detriment of a rules-based international order. The Prime Minister says he will renege on the very detail he himself signed, by removing checks from the GB/NI border if no deal is reached, but why did he not see that that is what he signed up to?
My Lords, just as the Welsh Government felt offended because they were not consulted on the internal market Bill, and because the powers that it gave to the Government took away from the devolution settlement, there is a similar feeling about these talks, because they have been neither fully involved nor consulted in the Government’s discussions with the EU. Do the Government not see that every time they upset the devolved Administrations, that challenges the very future of the union?
The economic disruption of leaving the transitional period without an agreement, or indeed with a deal which falls short of the Government’s promises, would worsen the hit already caused to the country by Covid-19. We have left the EU but it remains our closest neighbour and most important trading partner. We still share a continent in which security and judicial co-operation help to keep all our people safe. The Government’s approach to negotiations is weakening rather than strengthening our ties and mutual trust, and is therefore to be regretted.
I call the next speaker, the noble Lord, Lord Wallace of Saltaire. Lord Wallace? We might have a chance to come back to him later. In the meantime, I call the noble Lord, Lord Kerr of Kinlochard. Lord Kerr? Oh, there are some technical difficulties. We will adjourn until they are sorted out.
In his opening speech, the Minister talked about the Government’s well-established position on state aid. I am puzzled by that and I hope that he can explain. My understanding is that the European Union rules to which we now object were largely drafted by British Ministers and officials under Margaret Thatcher’s Conservative Government and that the Government’s current position on state aid has changed radically since last December, largely under the influence of the Prime Minister’s special adviser Dominic Cummings, but is not yet entirely clear. Perhaps he can explain.
We are now approaching the end of the transition period. That means, as the City of London briefing spells out, that we have to focus on what it describes as
“the necessities of the UK’s future trading relationship with the EU”—
and not just the trading relationship. Britain cannot escape its geography, for all the nonsense put out by Brexit Central and others after the referendum about the irrelevance of geography to Britain’s future. The number of British citizens who travel abroad for holidays, study, or work to the European continent dwarfs the number who travel to Australia, New Zealand and the western Pacific. The City memorandum points out that 75% of the data flows across the UK’s borders are with European countries. Cross-border crime is predominantly a matter affecting neighbouring countries. Britain’s security, society and economy will all continue to be profoundly affected by the ease or difficulty of interaction with our neighbours across the channel.
The maintenance of close relationships requires a legal framework that is treaty based, as again the City memorandum stresses. Treaties limit national sovereignty: they build relationships of “shared sovereignty”, as Sir Geoffrey Howe—that great and true Conservative—used to argue. The closer the levels of interchange, the denser the network of legal agreements that is needed to ease cross-border working. British Border Force personnel work in France under a bilateral agreement. British police exchange data on criminals with their counterparts in the Netherlands and Spain within a legal framework that safeguards confidentiality. British researchers collaborate with respected counterparts in Germany, Sweden and Finland. British holidaymakers have benefited for the past 40 years from access to a European health card in case of illness—a mutually advantageous arrangement, from which a large number of Conservative voters have benefited over the years and which the Government are now, sadly, determined to abandon.
How should one react if one’s Government deliberately, knowingly, admittedly and formally break international law? Like the noble Baroness, Lady Hayter, I think that Mrs May got it exactly right in the other place on Monday, and I congratulate her on her honesty and courage.
What matters for our debate today is how the 27 will react. They will have been as shocked as was Mrs May by the Bill that the Government produced, and shocked again when our Prime Minister had the nerve to accuse them of bad faith. However, I do not see them breaking off the negotiation; I see them starting infraction proceedings. The European Union runs on laws and pacta sunt servanda. I do not see them rejecting an agreement if the Barnier-Frost negotiations are to produce one but I cannot see them signing it—not without suspending its coming into force if our Government persist with what is now Clause 45 of the internal market Bill. Suspension seems to me to be the minimum on which the European Parliament would insist.
Why are we in this mess and how can we get out of it—indeed, will we? Let us not waste time on the fanciful story, for which no evidence has yet been produced, that the 27 were planning to blockade Northern Ireland’s food supplies. Who would enforce the blockade—the Commission navy, under Admiral Ursula von der Leyen? I suspect that the more banal context is our refusal to say what our future regime will be for sanitary and phytosanitary checks. Perhaps we are refusing to say because the chlorinated chicken war may still be raging in Cabinet.
The withdrawal agreement leaves Northern Ireland in the single market. Third-country suppliers of foodstuffs to the single market need a working SPS regime but the noble Lord, Lord Frost, seems to be telling the EU that ours is none of its business. Surely that is a stalemate that is relatively easy to solve, with the solution entirely in our hands. As for the other three problems that we have now discovered in the protocol, first, the Article 5.3 issue—how to ensure that export declarations and goods moving to the mainland apply only to those originating in the Republic—is an obvious task for the joint committee, and a relatively simple one. Secondly, the Article 5.2 issue, relating to goods at risk of entering the Republic, disappears if there is a free trade agreement.
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We have entered the final phase of negotiations with the European Union. The chief negotiators and their teams met in Brussels last week, as planned. As set out in the terms of reference published online, UK negotiators have continued informal discussions with the Commission between formal rounds. These informal discussions continue today in London on a range of areas. The next formal negotiating round—round nine—will take place in the week commencing 28 September. Before that, there were useful exchanges in the eighth negotiating round, with all issues being covered in some detail, including the most difficult ones. There are large areas of convergence in many areas and we will keep working to bridge the gaps.
However, differences still remain, including on fish and state aid, where the EU continues to ask for continuity of the status quo. On fisheries, we have been clear that we will not accept any proposals that compromise United Kingdom sovereignty over our fishing waters. We are seeking a relationship based on the European Union’s existing bilateral relationship with Norway. In order to make progress, the European Union must accept our position as an independent coastal state and any agreement on quotas must reflect that reality.
On state aid, the World Trade Organization rules are an internationally recognised common standard. Many major economies do not regulate subsidies beyond these rules. The European Union’s state aid rules are unique and have been developed specifically for the single market. The United Kingdom’s offer to the European Union goes further than World Trade Organization rules. We still believe that it would be straightforward to agree a free trade agreement, like those that the EU has agreed with other close partners around the world, and that this could be done quickly, but only if the European Union drops its unreasonable demands on fisheries and state aid.
As the Prime Minister has set out, there needs to be an agreement with the European Union by the time of the European Council on 15 October for it to be in force before the end of the transition period on 31 December. If there is no agreement, we would have a trading arrangement with the European Union like Australia’s. This would still be a good outcome for the United Kingdom. It would represent us reclaiming our independence as a sovereign nation, and that is what the British public voted for—twice. That said, I repeat that we remain committed to working hard to reach agreement by the middle of October.
Whatever the outcome, we have already done a lot of work to prepare businesses and citizens for the end of the transition period when we will leave the customs union and single market. In July, we launched a major public information campaign to encourage businesses and citizens to take action to prepare for the changes that will take place. In addition, we are taking a number of practical measures to prepare, particularly around borders. Also in July, we published the border operating model which, alongside a £705 million package of investment for border infrastructure, staff and technology, will ensure our borders are operational after the end of the transition period.
We have said that we will introduce new border controls in a pragmatic and flexible way in three stages up until 1 July 2021—an announcement that was widely welcomed. This approach gives industry extra time to prepare for the new procedures for goods coming into the United Kingdom, particularly in light of the impact of the pandemic. My right honourable friend the Chancellor of the Duchy of Lancaster made a full Statement on border provision, which I shall, with the permission of your Lordships’ House, repeat shortly.
As we set out in May’s Command Paper, we are committed to working closely with businesses to implement the Northern Ireland protocol to ensure unfettered access to the rest of the United Kingdom and to maintain and strengthen the integrity and smooth operation of our internal market. In August, we set out further guidance for how goods will move into and out of Northern Ireland and the support available for businesses. For example, our new free-to-use Trader Support Service, backed by up to £200 million of funding, will also deal with all of the formalities on behalf of traders importing goods from Great Britain or the rest of the world.
The United Kingdom Internal Market Bill will protect jobs and trade across the whole of the United Kingdom after the transition period ends. It will guarantee that companies can trade unhindered in every part of the United Kingdom, as they have done for centuries, ensuring the continued prosperity of people and business across the four parts of the United Kingdom, while maintaining our leading high standards for consumers, workers, food, animal welfare and the environment.
On the measures relating to the Northern Ireland protocol that have—how shall I put it—prompted much discussion, these have been included as the actions of a responsible Government with a duty to uphold our commitments to the people of Northern Ireland. The measures create a safety net that ensures that Ministers can always deliver on their obligations and could take steps to protect the transformational progress in Northern Ireland seen in recent decades. Your Lordships will, of course, have the opportunity to scrutinise the Bill shortly, and I look forward to hearing your views then.
I have set out today our approach to negotiations with the European Union and have given an update. I have outlined how the Government are preparing, and helping businesses and citizens prepare, for the end of the transition period on 31 December, regardless of the outcome of the negotiations with the European Union. We have been clear from the outset that we are seeking a relationship that respects our sovereignty and which has a free trade agreement at its core. We have been clear from the outset that we will not accept any proposals, such as the EU’s offer on fisheries and the so-called level playing field, which compromise UK sovereignty. We now need the European Union to understand the fundamentals of our position as an independent, sovereign country.
We believe there is still an agreement to be had with the European Union and remain committed to working hard to reach one by the middle of October. We need an agreement by 15 October; otherwise this will mean that we will have a trading arrangement with the European Union like Australia’s. Whatever the outcome of negotiations, on 1 January, the United Kingdom will regain its economic and political independence and finally, after four long years of debate, honour the wishes of the British people. I beg to move.
Late last year, the Prime Minister told firms that they could put forms “in the bin” because they would not be needed. We told him checks would be needed. Northern Ireland politicians told him. The Road Haulage Association told him. As we have heard from the Minister, the Trader Support Service has been set up to help this. Over £500 million has been allocated to the system for moving goods into Northern Ireland, as they will need customs declarations—indeed, Fujitsu has won the contract to help with this. His own Cabinet Office wrote to the Northern Ireland Executive about new border posts at ports in Belfast, Warrenpoint and Larne, for checks on agri-food. How come the Prime Minister professes not to know this and moved a Bill giving Ministers power to disapply Article 10 of the protocol unilaterally, by regulation, breaching Article 4 of the withdrawal agreement?
Foreign Governments, with whom we will need to negotiate, hear Mr Johnson threaten to break the withdrawal agreement if he does not get his own way—a breach of the UK’s commitment, in Article 5, to implement it
“in full mutual respect and good faith”.
Those foreign Governments witness our Government unpicking their own “oven-ready” deal, jeopardising trust in our willingness to keep to the rules and keep our word. What does this do to the trust that we will need when we negotiate around the world?
Along with the Minister, we want a deal with the EU. The City of London Corporation stresses the need for a positive relationship for the sake of households and businesses, wanting close regulatory and supervisory co-operation to make a success of our relationship. Business wants a deal, and at speed, as it needs certainty and time to adjust. Siemens needs to be able to work closely with the EU for its future prosperity and for jobs here. PwC and others urge a deal, not least for our SMEs, which are woefully ill-equipped at the moment for a no-deal outcome. The Food and Drink Federation is aghast at the impact of no-deal procedures on its imports and exports, possibly in 100 days’ time, giving no time for adjustments. It is worse for some sectors—for the organic sector, for example, where, if mutual recognition of regulation is not sorted, it might not be able to sell into Northern Ireland, let alone the rest of the EU.
The economy is already in trouble, so our EU negotiations need to help, not hinder. We need a good deal, tariff-free trade, consumer protection for goods imported from the EU, and no two-day delays and the major back-ups that the Government anticipate. Today, we hear that they are even trying to put the blame on hauliers rather than on their own negotiating failure. Why are the Government willing to sacrifice a good deal, which I and others think is already there and ready to be done, as well as our reputation, on the altar of being able to write our own state aid rules and move away from a level playing field?
On state aid, it is hard to understand why a Government, unwilling to use the freedoms they already have over state aid, would risk a deal for the ability to do more. As it is, the Japan trade deal commits the UK to stricter state aid curbs than those being discussed with the EU. If this is all about tech companies, have not the Government noticed that Silicon Valley did not grow on government handouts? It is the same across the piece. Whether in our negotiations with the USA or any other country, the same questions will arise on environmental, worker, safety or consumer standards and over dispute resolution mechanisms or redress. That is the meat of trade deals.
Thirdly, what does the Government’s approach to the talks mean for our citizens? Those living in the EU and following this delayed “I won’t move” process worry about their status. As Ruth Woodhouse, a Brit living in Spain wrote to me from Malaga:
“UK citizens residing in the EU thought we had secured a relatively good, guaranteed level of protection in the withdrawal deal. However, if the government can tear up the rule book, clearly anything can be changed on a whim and nothing is guaranteed. I fear that our hard-fought rights could be just as easily be removed.”
Yesterday, we learned that thousands of Britons living in the EU were told their UK bank accounts will be closed, with Lloyds, Barclays and others taking action due to the lack of a post-Brexit trade deal. It is no easier for employees, with JP Morgan sending staff off to other EU capitals, due to lack of confidence that an agreement will arise on services. Jobs, money and people’s lives are all at risk because the Government are failing to negotiate.
Without a deal, there will be trouble for travellers, whether by air or sea. When the police imposed full border checks at channel ports last week—nothing to do with Brexit—the main road to London was snarled up within hours, with trucks parked up on the M20 motorway, a reminder of how any delay quickly causes chaos and will not solved by lorry parks across Kent or, indeed, around Holyhead.
Finally, the UK’s approach to the talks has challenged the devolution settlements, by excluding the devolved Governments from its thinking and talks. We see it in the internal market Bill described by the Welsh Government as,
“an attack on democracy and an affront to the people of Wales, Scotland and Northern Ireland, who have voted in favour of devolution on numerous occasions.”
I remind the Minister that it is not just the referendum result that should be recognised but those votes for devolution. Indeed, the treatment of the Welsh Government led to the resignation of the Conservative MS, David Melding.
To manage this future relationship, from 1 January 2021 —three months from now—we need a legal agreement: a partnership, spelled out in treaty form. One of the most dishonest statements that the Government keep making to the public is that we can opt for an “Australia-type agreement” with the EU, when no such agreement exists. A no-deal future relationship threatens damage not only to our economy but also to our security and to the openness of our society.
Successive British Governments, from James Callaghan and Margaret Thatcher onwards, have negotiated agreements with our neighbours to manage the rising intensity of interactions between us—within the framework of the European Union. Our current Prime Minister signed up to a declaration 11 months ago on our future partnership, which envisaged a network of agreements to manage our unavoidably shared interests. Since then, however, he has retreated, under pressure from the ultras in his party and those now in the Cabinet who were previously in the Referendum Party or UKIP. The noble Lord, Lord Frost, has spelled out a doctrine of sovereignty that would suit North Korea but makes no sense for a democratic country with an open economy.
Worst of all, the level of hostility expressed by Ministers, Conservative MPs and the right-wing media towards the Governments of France, Germany and the other members of the EU has risen alarmingly. The City of London briefing that we have all received expresses
“growing concerns that acrimony between the UK and EU may result in a failure to reach an agreement … a no deal outcome would be likely to engender ill will on both sides and damage the future UK-EU relationship.”
Even if the Government reach a last-minute deal, the image of a Government who distrust their neighbours and break international treaties when they feel like it will damage Britain’s ability to sort out the unavoidable problems that will follow from our more distant relationship. The Prime Minister talks about a global Britain and an independent foreign policy, but the failure to maintain close co-operation with our European partners in international organisations and negotiations across the world would leave us dependent on the limited good will of whoever comes out of the contested American presidential election and our distant friends in New Zealand and Australia.
Before the noble Baroness, Lady Noakes, repeats yet again her accusation that any criticism of the Government’s stance flows only from remoaners who never wanted to leave, I stress again that we are now debating the future, not the past. We are debating the framework within which our holidaymakers will travel next summer, the difficulties that British banks will encounter if agreements on data flows and financial flows have not been reached, and the obstacles that British police and intelligence will face if there is no clear legal structure within which to maintain the co-operation that they have built within Europol.
The noble Lord, Lord True, is a real Conservative, not one of those who have entered the party from more right-wing groupings as more moderate Conservatives have left or been expelled. I hope and trust that if the Prime Minister deliberately crashes the final stages of the negotiations and leaves without a deal, the noble Lord will follow other colleagues and resign. The national interest requires a deal, and the Government will betray the national interest if they fail to agree one.
Thirdly, the Article 10 issue—reach-back into the mainland on state aid—falls away if the level playing field argument is settled. This could be the crux of the matter. On state aid, the EU has dropped its unrealistic bid for dynamic alignment and CJEU jurisdiction, but it wants to know that we will have an effective regime with an independent authority, transparency, legal redress and, where trade with it is concerned, a dispute settlement mechanism. However, we seem to have said again that all that is none of its business and we are not going to set up our system until next year—so there.
This is serious. I do not believe that there can be a UK-EU free trade agreement unless on state aid we meet the EU half way. It has moved but we have not; indeed, we have regressed, resiling on last October’s political declaration when we agreed:
“Given the Union and the United Kingdom’s geographic proximity and economic interdependence, the future relationship must ensure open and fair competition, encompassing robust commitments to ensure a level playing field.”
The EU still believes that that is needed because it has heard far too much talk of Singapore-on-Thames, so I do not see us getting an agreement if on state aid—as on food standards, the environment, fish and carbon trading—we stick to saying, “Sorry, mind your own business, we’re taking back sovereignty.”
It is the sovereignty point, so stressed by the noble Lord, Lord Frost, that really puzzles me most. I would say that France and Germany are sovereign states and that their sovereignty was not diminished by their commitment to co-operation. I would say that we never lost our sovereignty; indeed, we have just demonstrated that by using it to leave. Sovereignty does not just mean the right to be left alone. Without sovereignty one cannot make treaties, but having sovereignty does not confer the right to dictate, or unilaterally revise, the terms of treaties and does not preclude binding commitments to co-operation.
Of course, I may be being naive. If, contrary to today’s reassuring remarks from the noble Lord, Lord True, we are actually on the ERG’s preferred policy of no deal then “none of your business” and the Clause 45 blunderbuss are easily explained. Avoiding commitments to high SPS standards might make sense if one’s priority was a deal with the United States. If so, there is a fatal flaw in that logic: if we blow up the Good Friday agreement, there will be no deal with the EU or with the US. The US is a guarantor power of the Belfast treaty, and American support for the Good Friday agreement is deep and bipartisan. The Foreign Secretary’s attempt last week to convince Washington that the threat to it comes not from us but from Brussels was not British diplomacy’s finest hour; it did not wash, nor will it.
I still hope for a second UK-EU treaty. That can only be thin now, but even a thin one would be better than nothing. However, it will not be agreed if we stick to our exceptionalist “mind your own business” sovereignty, and it will not come into force if we blow up the first treaty, which is only eight months old.